02-05-2003 00:24									#91
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quote: Originally posted by Big Crunch How much of the profits are actually attributed to high pump prices? I know that Shell, for example, make no profit on pump sales in the UK. I think it similar for other outfits.

In it a non-profit organization?

	02-05-2003 00:29									#92
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quote: Originally posted by Big Crunch What do you call OPEC then?

I call that the beginning of an argument. We didn't have it before. In fact for all I know, Exxon does collude. I'm just waiting to read about it here.

But to get the discussion going, how does OPEC cartel affect Exxon profits? Is Exxon a part of the cartel? Aren't companies like Exxon more a force for disabling the cartel as happened in the early 80's. Profits drive market entrance, no?

The best thing in the world would be if OPEC cracked. That is why opposition to opening ANWAR is not well-founded. It isn't about ANWAR supplanting all offshore production. It's about that incremental amount of competition, which will get the cartel to crack. In the 80's, increased domestic production driven by oil deregulation was a big factor in making this happen. If we go back to the regulation scheme of the 70's for domestic oil it will SUPPORT the cartel in the end.

	02-05-2003 00:31									#93
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If you check the XOM release you can see that they made ~$4B from extraction and and just ~750MM from refining and retail sales. A lot of companies flow thru their business in one sector or another at break even. If RD/Shell has breakeven (zero profits) on their retail sales, they are probably trying to maximize profit in extraction or something. Kinda like the US auto companies selling cars at zero-ish profit and making their money on the financing side of the business.

	02-05-2003 00:33									#94
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quote: Originally posted by DanS I'm not privy to what goes on in the US One thing to note is that, like Canada, much of the US can't be served very well by mass transit. So it's not without reason that this money doesn't go to mass transit.

I'm not sure I'd agree with that. True, geographically, little of Canada and the US can be served by mass transit, but if you look at where the bulk of the population is located (ie: in urban areas), it becomes a more realistic option.

You could also add to mass transit ideas like commuter rail and/or better or expanded intercity rail links a la Amtrak or VIA. And yeah, don't get started into how poorly run those organizations can be. That's another issue altogether.

	02-05-2003 00:38									#95
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quote: Originally posted by Sten Sture XOM, directly and indirectly, paid more than $12B in taxes this quarter alone. The subsidy figures are fine at face value, but only if you don't think about it critically. The govy buys fuel for Air Force One, and the safe housing inspector from the city of Roanoke. That is just a cost of operating a government. Not what should be refered to as a subsidy. The govy buys electricity to keep the lights on, but that isn't a subsidy - now is it?

Actually, those are all subsidies, but people don't think of them the same way. The subsidies people don't like are subsidies like transfers in payments and military defense. The government doesn't necessarily get benefit from those.

	02-05-2003 00:38									#96
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where the bulk of the population is located (ie: in urban areas)

I don't know about Canada, but in the US, most people live in suburban or exurban landscapes unsuitable for a predominance of regular mass transportation, like heavy rail.

Some small things can be done, and are.

	02-05-2003 00:39									#97
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The subsidies helping out oil companies are a lot higher then the direct ones Sava quoted. We subsidize auto companies and invest a ****load on roads, which only generate more traffic, as opposed to investing public transportation or rail(another big difference with Europe and a significant factor in the oil price difference). And the ridiculous calculations people are showing here don't factor in tax breaks or any of the above investments which help immensely in drumming up demand for oil.

	02-05-2003 00:40									#98
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quote: Originally posted by Sten Sture If you check the XOM release you can see that they made ~$4B from extraction and and just ~750MM from refining and retail sales. A lot of companies flow thru their business in one sector or another at break even. If RD/Shell has breakeven (zero profits) on their retail sales, they are probably trying to maximize profit in extraction or something. Kinda like the US auto companies selling cars at zero-ish profit and making their money on the financing side of the business.

1. Could be some fun and games with the transfer pricing as well.

2. I could see how the cycles, might drive changes in the profitability. When prices are high/supply is tight, that means extraction is profitable. But since demand is lower (there is some elasticity) then profits at the pump will be lower (especially given that you can't reduce footprint immediately.) REverse would also apply. (One thing that confounds this a little is that oil companies know there is a cycle, so exploration costs etc. probably are based more on a long term outlook (i.e. they are long term capital decisions. Still the extraction dollars for current production, would ride that wave.)

3. Would be interesting to look at some pure play extraction or retail operations. Also, I would be interested in which area tends to be more competetive (less collusive).

	02-05-2003 00:41									#99
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quote: Originally posted by Kidicious In it a non-profit organization?

More likely it isn't a very efficient organization or at least it is less efficient then its more profitable competetors.

	02-05-2003 00:43									#100
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There are lots of gas stations that make their money on mini-marts, rather than the pump. The pump is the way to bring people in the door.

	02-05-2003 00:44									#101
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The point is not whether there is a subsidy or a tax. The point is whether the subsidy or tax is beneficial to society. A subsidy or tax will increase or decrease the production of the good. So if we say that we as a society wants more of the good we should subsidize it, and if we want less of a good produced we should tax it.

I think that countries that have high taxes on gas have the right idea. In fact, I think that gas tax should be higher in the US, because we spend so much in defense protecting sources of oil for companies like XOM. Also, a higher tax would keep the price of oil, which funds terrorism, down.

	02-05-2003 00:48									#102
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The transportation infrastructure does not exist solely to benefit oil companies.

(there are other companies too!)


And I think most people accept that subsidies are payments with out direct benefit to the payer and are above and beyond "the normal course" of operations. If I buy a burrito, that is hardly a subsidy to the Taquiria! I get a burrito! mmmm

	02-05-2003 00:51									#103
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quote: Originally posted by Sten Sture The transportation infrastructure does not exist solely to benefit oil companies. (there are other companies too!) And I think most people accept that subsidies are payments with out direct benefit to the payer and are above and beyond "the normal course" of operations. If I buy a burrito, that is hardly a subsidy to the Taquiria! I get a burrito! mmmm

All government expenses are subsidies. There are good and bad.

	02-05-2003 00:51									#104
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70% of goods in the U.S. are transported in Big rigs so if you raise the price of gas/desiel then you will raise the price of everything transported by gas/desiel.

Can you spell I-N-F-L-A-T-I-O-N?

	02-05-2003 00:53									#105
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quote: Originally posted by Oerdin 70% of goods in the U.S. are transported in Big rigs so if you raise the price of gas/desiel then you will raise the price of everything transported by gas/desiel. Can you spell I-N-F-L-A-T-I-O-N?

This would be a one time increase in the price level, which could be corrected for. Inflation would not be a permanent aspect of the economy.

	02-05-2003 00:53									#106
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DanS:

BC's a good example. About 50 percent of the population can be well served by public transit, linking 2 million people with each other.

It may also be feasible from Vernon to Kelowna all the way to Penticton due to population density.

Everywhere else in the province is too sparsely populated.

With Alberta, Calgary and Edmonton with links within the cities, Winnipeg for Manitoba, and Most of southern Ontario and southern Quebec.

Everywhere else in Canada could not sustain adequate public transit.

	02-05-2003 00:55									#107
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70% of goods in the U.S. are transported in Big rigs

By weight/mile, it's more like 40%.

	02-05-2003 00:58									#108
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This weeks time magazine puts the number at 70%; the highest ever and the lowest number for rail since records have been taken.

	02-05-2003 01:01									#109
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The tax money could also be used to encourage the sale of more gas efficient cars. Just a higher tax in itself encourages this. I own a Honda Civic. I could really care less if the price of gas is $2/gallon or $3/gallon, because it will only cut into my disposible income by about $20-$30/month, but if I owned a gas gusler that could be maybe $50-$60/month. To encourage more sale of gas efficient cars there could be a tax rebate associated with the purchase of these cars.

	02-05-2003 01:02									#110
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You raise the price of gas and the fat cats can afford to pay more but what about the single mom who's just barely making ends meet? she's now homeless because of your tax increase.

	02-05-2003 01:03									#111
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quote: Originally posted by Oerdin You raise the price of gas and the fat cats can afford to pay more but what about the single mom who's just barely making ends meet? she's now homeless because of your tax increase.

Nah, she can take the bus.

	02-05-2003 01:06									#112
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Believe it or not the majority of people (I beleive) below the poverty line in the US live in rural areas or atleast alot of them live in rural areas. Like Obiwan said those areas can't support much of a mass transit system.

What does she do now?

	02-05-2003 01:07									#113
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What BC does is tax SUV's, and offer tax rebates to improve the competitiveness of hybrid cars.

That way the poor souls driving cheap beaters are not penalised for driving.

	02-05-2003 01:08									#114
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"Nah, she can take the bus."

Just a more frank and honest way of saying "spend it on public, mass transportation."

It's all in how you spin it, boys.

	02-05-2003 01:09									#115
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quote: Originally posted by obiwan18 What BC does is tax SUV's, and offer tax rebates to improve the competitiveness of hybrid cars. That way the poor souls driving cheap beaters are not penalised for driving.

That actually sounds like a real solution. Either that or a cyclinder tax which taxes I4s less then I6, V-6, V-8 etc...

	02-05-2003 01:11									#116
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This weeks time magazine puts the number at 70%

Hmmm... You might be right. Maybe Adam Smith can set me straight.

	02-05-2003 01:14									#117
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quote: Originally posted by Oerdin Believe it or not the majority of people (I beleive) below the poverty line in the US live in rural areas or atleast alot of them live in rural areas. Like Obiwan said those areas can't support much of a mass transit system. What does she do now?

Towns without public transportation are small enough to walk around or ride your bike. If she's disabled or something, maybe she should move.

	02-05-2003 01:15									#118
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quote: Originally posted by JohnT "Nah, she can take the bus." Just a more frank and honest way of saying "spend it on public, mass transportation." It's all in how you spin it, boys.

True

	02-05-2003 01:17									#119
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quote: Originally posted by obiwan18 What BC does is tax SUV's, and offer tax rebates to improve the competitiveness of hybrid cars. That way the poor souls driving cheap beaters are not penalised for driving.

The problem is that most poor people drive around in cars that hog gas and cause more pollution. The tax credit to get them to buy these cars would have to be very significant, and it still might not work.

	02-05-2003 01:19									#120
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quote: Originally posted by Oerdin That actually sounds like a real solution. Either that or a cyclinder tax which taxes I4s less then I6, V-6, V-8 etc...

While I am usually against progressive taxes. This is one that I could support. Heavier vehicles cause more wear and tear. These are usually the vehicles with the larger engine size. Maybe a Gross Vehicle weight tax applied annually?